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CA Department of Insurance
CA Department of Insurance
CA Department of Insurance

Earthquake Coverage Experience Five Year Trend

(Revised 10/4/02)



Annually, the Statistical Analysis Division (SAD) of the California Department of Insurance (CDI) conducts a survey of California earthquake premiums and policy counts of all property and casualty insurers licensed in the state of California. This survey was originally conducted to assist the California Earthquake Authority (CEA) with their fee assessment of member companies. Although we continue to furnish the information to the CEA, the tables and charts that follow provide informative and useful personal property and earthquake data to the consumer, the insurance industry, state legislators, and California Department of Insurance management.

Since the Northridge Earthquake in 1994, which amounted to more than $20 billion in damage, and the requirement that earthquake coverage must be offered with homeowners insurance, companies began a strict underwriting campaign that limited the availability of homeowners and earthquake insurance. The establishment of the CEA in 1996 allowed the transfer of the responsibility of insuring losses due to earthquake from the member companies to the CEA. The CEA member companies accounted for 65% of the total residential market in 1996. In 2000, the percentage rose to 72%. Although the CEA member companies increased their market share of the total residential market, the number of earthquake policies in-force decreased every year since its inception.


This report concentrates on premiums and policy counts submitted by companies for the years ending December 31, 1996 through the year 2000 for the personal lines residential insurance market. The tables and charts illustrate the changes in consumer sentiment about earthquake coverage.


  • Total residential property insured increased steadily over the last five-year period - increasing 18% since 1996. In contrast, earthquake has experienced an 18% decline in written premium (Exhibit A).
  • Similarly, total residential property insured increased 7.5% the last five years while the number of residential earthquake policies decreased 46% (Exhibit C). The biggest drop occurred during 1997 when most earthquake policies were converted to mini-policies that limited coverage and were impacted by increases in earthquake rates.
  • In 2000, CEA companies accounted for two-thirds of the earthquake market (Exhibit D).
  • The number of homeowners with earthquake coverage has decreased to 17% in 2000 from 33% in 1996 (Exhibit E).


This report summarizes the premiums and policy counts on residential property and earthquake for the past five (5) years. The changes in the earthquake market are attributed to many issues, none that can be explained within the scope of this study. The fact of the matter is that the number of homeowners with earthquake coverage dwindles over time after a major earthquake. Since the Northridge Earthquake in 1994, the earthquake market has changed considerably. Changes in pricing and coverage are factors, but not the only ones. Hopefully, this report provides some light into the complicated matter of earthquake insurance.

Any questions or comments regarding the methodology of the data collection presented in this report may be forwarded to Ben Gentile, Division Chief - Statistical Analysis Division at (213) 346-6316. Questions regarding earthquake or residential property coverage should be directed to the Department's Consumer Hotline at (800) 927-HELP. Also, for premium comparison on residential property or earthquake coverage, check the California Department of Insurance Compare Premiums / Rates webpage.

Summary Tables

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